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Friday, January 21, 2011

China Devalues US Buying Power By 30%

The trade imbalance between the US and China, a hot button between the nations for the last decade or so, is finally going to start to stabilize in the summer of 2011. However, it is doing so with a de facto devaluation of the US dollar and its buying power. The average American will see a spike in the price of everything from their favorite jeans and T-shirts, to the cost of some electronics.

The Chinese have decided to devalue the US dollar’s buying power, without devaluing the US Treasury holdings they hold. It is an elegant solution to their issues. It will be interesting to see if they can pull it off, while they try to prop up the European Sovereign debt markets at the same time.

The Chinese are attempting, successfully so far, to introduce the Yuan as a global currency in which to settle international trade. China is pumping into its own internal currency markets so much liquidity, they need an export market to develop for the Yuan or their own internal markets will overheat.

23 comments:

China can try and jack up prices in 2011. Unfortunately U.S. wage earners for the most part wouldn't be pursuing Chinese purchases with any renewed vigor anyway even if they didn't. You see we're losing jobs right and left. So go ahead and jack your prices up. It won't work just like raising taxes won't work increasing productivity or ultimately government revenues.

This game of strategy on trade imbalances doesn't fix the cause. It just window dresses the symptoms so it looks like it's fixed.

China, my message to you is this: whenever you think you finally have America bent over the barrel and exactly where you want them, the American people will give you a big fat middle finger in return. It's a game you can't win because you depend on us to consume. And when we stop or slow down consuming guess what you stop producing.

I think your common worker in those thousands of common factories is going to be mightily upset when he doesn't get that $5 daily paycheck any more because American's tell you to stick it. And there so goes your plan.

January 20, 2011 11:33 PM, i wish it was that simple but for the most part I bet 80% of the low end to middle end goods come from China across the board. So yeah we will be still buying they're junk, because we have too. Its just like people (including me) saying how much I hate Walmart but its hard to not shop from the beast because mostly in my area all I have is Walmart, in a 10 mile radius I have like 8 Walmarts, 1 old 70's Kmart, and 1 Target. So you see just buy the numbers I still shop Walmart!

What the America people don't realize is we're becoming s third world country with nukes!

1. Higher Prices, just mean China gets more printed paper. What does China do with that extra paper without devaluing the dollar? Buy more Treasuries? Pointless and Futile

2. High costs will make other countries more competitive. So far China has been able to beat out the competition with super low wages and very low finish good prices.

3. China's Bubble may be about to pop has it appears to have a liquidity problem, and soaring food prices. When the Chinese Bubble pops, it will make the US crisis of 2008 look like a firecracker next to a MOAB (Mother of All Bombs). China has whole cities with a million+ residences that virtually no one lives in. China has empty malls that are bigger that the largest malls in the US that one one shops at. China has over capacity in everything, factories, steel mills, and of course debt.

It would not surprise me that China experiences a Second Communist revolution after the Chinese Experiment with capitalism fails.

What on the surface appears to be a unified communist movement is actually often divided into two opposing Party trends.On the one hand because these countries are usually starting from a poor economic base there is a need to provide for the peoples day to day economic needs and welfare, on the other hand there is a need for industrial development , a need to set aside funds ,to re-invest a proportion of their new wealth from production as investment for the future society.

The real communists call their opponents in the parties themselves “revisionists” ,those that seek economic development to build a wealthy society at any cost and by any means including capitalism .To put “Profits in command” of a market economy and forget about politics and building different future social /economic relations amongst the people . Of course that is really a recipe for building capitalism not socialism.This is called by Communists “The theory of the productive forces”

Stalin was well known for his single-minded emphasis on heavy industry development and putting an efficient manager as “The party” in control of everything .He worshipped technology but paid little attention to the peoples commodity needs and the planned economy lacked “balance”and freedom .

Mao seeking all round development saw this method of unbalanced planning as “walking on one leg”. Mao for example pushed the Communes as a way to develop both industry and agriculture in the countryside ,not the collective farm /town commodity production idea of Stalin.

Mao, learning the good and bad experiences of the soviets attempted to build the Chinese economy in a different way, particularly relying on Mass struggles to get the people themselves involved, even at the expense of possibly destroying the party he himself led by peoples removal of the party bureaucrat bosses in control during the cultural revolution. For Mao it was the long term socialist development and direction that was important not simply the short term growth alone.

Deng ,trained in Russia on the other hand was obviously of this “nationalist” type part of a “revisionist” right wing within the communist party itself . Deng, the pragmatist discarded Mao “Politics in command” economics for building socialism and turned to developing Chinas economy through tapping “imperialist” capital investment in exploiting the cheap labor of the Chinese people. The cost of this foreign investment must be paid for out of profits made from export of wealth . It is hardly socialist owned industry. Its hard to get rich ,or accumulate wealth ,even from a trickle down effect, when your country exports half the commodity wealth it makes !

Even if there is “economic development” the question is; Industrial development For Whom ?For what class”Some Chinese, a minority have got rich in this process from this cheap labor and resemble the robber barons of Americas own early stages of industrial development, fueled by the cheap labor of immigrants.

But ,despite the stories in the West capitalism has not bought a new prosperity to the vast majority ,the hundreds of millions of the poorer Chinese .Thirty years of this Profit in command ,development at any cost as long as a profit can be got pollution is fast destroying the living environment of the people.The Chinese have given capitalism a run for its money and some jobs were created.The “Communist” party and the new Chinese elite promise that capitalism will continue to expand the economy and deliver jobs, but now there is a property bubble and rising inflation and the export of wealth economy is not looking good ,as the importing countries appear insolvent. The Maoists after being swept aside by Deng for 35 or so years are still patiently waiting in the wings for the supporters of the “Theory of productive forces” economy to run out of puff and are no doubt organizing for a new revolution amogst the jobless workers and poorer peasants

Perhaps that's because the Chinese can't start any businesses thanks to their Communist Regime? I'd imagine it would be quite difficult trying to make a living under a Communist government.

Oh well. When a capitalist system has been raped because of a few greedy bastards it will eventually lead to a breakdown of society. Families fall apart, values and morals deteriorate, paranoia and misery spread, and government expands its power.

Of course you know this leads to Socialism.

Those that will make it through this destruction will be the families that maintain their closeness. All the guns, technology, and gold will avail to nothing. It will be Spirit and Family that decide who lives and who goes.

Well you see, it is that simple. It's simple because the fact of the matter is that Americans are going to barely have enough to put food on their table much less enough left over to buy Chinese stuff at inflated prices. Food and utter necessities will be the new reality. Not Chinese trinkets, radios, and even clothing. This is my point. A point ultimately about priorities. And timing. China's screwed because the timing's all off for their plan to pay off. Which is probably why they'll be forced to go to war with us. It'll be either kill or be killed is the way they'll try and settle this whole upcoming confrontation with the West.

"Perhaps that's because the Chinese can't start any businesses thanks to their Communist Regime? "

Stop looking at labels deal with real facts.

There are at least a million more big and small private businesses in 'socialist" China than in capitalist America.

It is probably easier to start up a small business in China than America.But the competition is tough.

On the other hand in 'capitalist", Corporate State America socializes the losess of its dominant TBTF capitalist finance sector ,making it difficult for small businesses to be established and compete with the favored monopolies. From small shopkeepers to small banks .

8.49 the only people I see that claim to be "forced" into declaring inevitable merchantilist currency wars and open warfare are Americans.

mao good good man bring much prosperity to all including worldchavez good good man loves his people winner of many many high honors loves world tooche one of best good man many many people still love and with much good reason ahmadinejad one of best good men ever with much better love for mankind for sure clear winner of nobel peace prize in '11notice not one good love man from bad USA these people all bad haters of mankind all over worldand always have been because they are greedy corporate pigs

America (bad?) devalues and its dollar and interest rates through money printing .(good) The Chinese (bad ?) have maintained a stable relationship of the Yuan to the dollar value,(Guilty !)once the world standard of exchange value in world trade and finance.This however means the Yuan loses exchange value against the Euro and other currencies with falls in comparative value with those currencies.America(very good ) demands that China (bad?) gives America a free ride by raising the value of the Yuan so that it matches the value of the now devalued dollar. (good ).

Of course if China does raise the value of the Yuan, how will Americans (good) be able to buy Chinese trash and for Wall Mart make a big profit from Chinese cheap labor (good)when selling the trinkets to Americans (good)?

Americans have become like the people of old Soviets (bad) whining about the quality and quantity of the trinket trash in the capitalist market stores (good) that they cannot now afford to buy even though the commodities are produced with near slave levels of wages.

The Soviets(bad!) GUM market socialist stores ,had lots of empty shelves and people did not have much choice in spending their money.

But in America(good) the shelves are now full of Chinese trash and trinkets and “choice” (good) But the credit supply has run out so the shelves remain well stocked while debt ridden Americans whine outside about their lot, like old Soviet Russians .(bad)

Let us all blame socialist Chavez(bad)and Mao( very bad !) and warmongering Muslims(very very bad!) for Americas economic debt problems in paying for now unaffordable Chinese trinket trash and wars and with a dollar value being deliberately destroyed not by the US Fed(good) but by a filthy stable Yuan and Chinese money printing overvaluing the Yuan .(bad)

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